This website uses cookies to ensure you have the best experience. Learn more

Do Cfo's Make Better Ceo's? Essay

1287 words - 6 pages

Do CFO's make better CEO'S?

Introduction
The CFO possesses many significant advantages as well as disadvantages if he/she is chosen to become the CEO.
Recently an increasing number of company boards have decided that in order to best serve shareholders it is prudent to promote the CFO to CEO. CFOs themselves remain reticent about any personal ambitions beyond the CFO role - at least in public. But given this recent string of high profile promotions there is an increasing recognition that they have what it takes to take over the CEO role. To understand why CFOs are more frequently getting the top job it is important to know what the contemporary holder of the post does with his time. ...view middle of the document...

It serves to protect the company and its constituents. Part of the reason for the trend towards recruiting CFOs who can behave as strategic partners is that the investor community looks much more critically at the business performance and management strengths and weaknesses of corporates. This strategic positioning gives them an opportunity to buff up their image, and make themselves seen as a ore credible candidate to take over the CEO role (Brewis, 1999). But though a competent CEO must have an understanding of numbers, which does not infer that having good mathematical skills is all it takes to become a good CEO.
Hard-core finance and accounting skills alone do not propel CFOs into the CEO suite. Eric Krell explains in “Room at the Top” that according to four former CFOs who became CEOs in the past few years, deep operational experiences, customer interaction and communication savvy help make CFOs viable CEO candidates. Swelling compliance workloads have limited the time CFOs can invest in value-added activities, such as strategic planning, that make them more attractive CEO candidates. Senior managers atop the CFO-to-CEO career ladder consistently point to the operational activities they engaged in while they were finance executives as the primary reason behind their ascension to CEO.
There are many examples of CFOs moving up that did not fare so well. This mainly seems to be due to a lack of managerial experience while in the financial realm and limited exposure to the decision making levels of any company until stepping into a high level executive role. CFO’s have limited experience running a company or business and how things are done. Majority of CFO’s lack well developed interpersonal skills and knowledge of leading an organization. While this knowledge can be learned and acquired, the majority of CFOs are not particularly socially oriented or interested. They are accustomed to working with numbers, which usually doesn't translate well into working with humans (Krell, 2005).
A good CEO of a company requires a number of qualities. CEOs work hard, but must delegate responsibility. However, they must be in touch with the business. Most do not embrace sophisticated thinking. Still they know of what is happening around them in their industry as well as their own company. Successful CFO’s are not at all concerned or interested with these matters.
One of the main qualities of a CFO is to look forward, and using forecasting techniques, predict the future, not only for the day-to-day operation of the company, but also for financial presentations for potential investors. One of the main qualities of a CEO is also to look forward, predict the future, but no in the same terms as a CFO. They have to look forward in terms of the market movements and trends.
Traditionally CEO’s have come from...

Other Papers Like Do Cfo's Make Better Ceo's?

Assignment 1

589 words - 3 pages packages are excessive will certainly remain controversial, it is clear that the existence of substantial CEO severance packages has a theoretical foundation. I'm not really sure if this practice is best for the company. However, I do think there are two main areas a severance package even if of obscene proportions are paid out to undeserving CEO's on their way out. 1) FINANCIAL HEALTH OF THE COMPANY – There is no hard and fast rule here

It Risk Management Essay

1301 words - 6 pages Information Technology Risk Management Risk management is the continuing method to recognize, examine, appraise, and treat loss exposures and monitor risk control and financial resources to diminish the adverse effects of loss (Marquette). Every company has a goal. In this internet age, as companies use computerized information technology systems to manage their data for better support of their goals, risk management plays a crucial role in

CEOs and Business Leadership

1198 words - 5 pages high profile promotions there is an increasing recognition that they have what it takes to take over the CEO role. How and why has the CFO become a contender for the top job? References Picker, Ida, 1989, Do CFOs Really Make Good CEOs Institutional Investor; New York; Aug 1989; Janine Brewis 1999, How a CFO can graduate to CEO Corporate Finance; London; Jun 1999 Janine Brewis; 1989 Do CFOs Really Make Good CEOs Institutional Investor; New York; Aug 1989; Picker, Ida;

Are CEO's Overpaid?

3107 words - 13 pages question when a person is making thousands of times more money than some people, especially when some of those people are starving (Newton 242). CEO's should be more aware of their earnings and realize that they have more than enough money. With all the problems in this world, a person with millions of dollars should be able to make a huge difference by sacrificing some of their earnings.Outsourcing, a major issue in today's political arena, has

Too Big to Fail

722 words - 3 pages , so he decides to have a meeting with CEO's of major banks to explain this. He obtained help from the chair of the Federal Deposit Insurance Corporation (FDIC), Sheila Blair, and advised for the cooperation of these banks and threatened them with an audit from the FDIC if they failed to do so. The CEO's had no other choice but to accept. Paulson explains that all present CEO's of major banks will be receiving a mandatory capital injection that had

Are Ceos Overpaid

2023 words - 9 pages Are Over the past 15 to 20 years more and more CEOs have been scrutinized and the typical CEO's pay is largely driven by market factors. CEOs pay is strongly related to stock performance. Because of more bureaucracy, the CEO's job has become increasingly more difficult over the past decade. In fact some would even argue that they are not paid enough and should be paid more. CEOs are being scrutinized more than ever. Some have taken on

Organizational Management

1804 words - 8 pages you can’t make it drink”, it will only drink if it is thirsty… same with people (employees). They will only do what they want to do or are motivated to do. If they want to excel in their workplace they must be motivated to it either on their own or with the help of management. (Robbins & Coulter, 2005) Once all of this has been taken place, it is management’s job to step back and let the people perform to their potential.     Another

Week 3 - Corporate Strategy Analysis Discussion Summary

855 words - 4 pages apparent that Mulcahy did not have the vision to diversify further according to the video. (Rogers, unk) Conclusion After looking at what each of the CEO's did and how they got each of their respective company from becoming a complete failure. I can understand better the reasons for no diversification being planned because of the current state of the business. Whether it was in crisis or if each CEO had time to plan better for

Path Goal Theory

983 words - 4 pages HOW SOUTHWEST AIRLINES SOARS CASE QUESTIONS: 1. What leadership theories and concepts have contributed to Herb Kelleher’s success at Southwest? Herb Kelleher is an outrageous, off-the-wall CEO that has built a unique organization and has been extremely successful in a very competitive market. Kelleher has an unorthodox style when compared to CEO's of other major corporations. This style is reflected in his organization's style. Herb

Mastering "Takeaway Leadership"

1312 words - 6 pages more humane. "You already know what to do" is a powerful message. It reassures managers that they needn't scurry back to the boss for further instructions every week, month, or quarter. It also positions the leader as the person who really needs to know when artificial (man-made) blockages are keeping employees from hitting their marks. Imagine that -- a boss who wants to make my job easier! In a subtle sort of way, this style that

Ethical Business Practices

560 words - 3 pages positive link between the existence of corporate ethics programs and financial performance. A 1997 DePaul University study found that companies with a defined corporate commitment to ethical principles do better financially (based on annual sales/revenues) than companies that don't. Similarly, another study by the University of Southwestern Louisiana, titled "The Effect of Published Reports of Unethical Conduct on Stock Prices," showed that publicity

Related Essays

Sarbanes Oxley Ceo's And Cfos

954 words - 4 pages The CEO's and CFO's Of Public Companies Section 204 Sarbanes-Oxley Act (SOX) mandates that the public accounting firms, or auditors hired by a publicly traded companies will report to an Audit Committee that serves on the Board of Directors of that company. Also, this section outlines the information that the auditors will have to report to the Audit Committee such as, accounting policies and practices used by the company, alternative

Accounting Essay

771 words - 4 pages 'accountants move easily from watchdogs in their capacity as auditors to being the architects of clever deals and frauds as CFO's and CEO's.' (lies damn lies) In the Statement of Auditing Standards 100, published on March 1995, we are told that 'the responsibility for the preparation of the financial statements is that of the directors of the entity'. Therefore the auditor is only responsible to act as a watchdog and make sure that the directors' of the

Risks Of Noncompliance In Corporate Governance

3160 words - 13 pages been either successful or unsuccessful in their compliance are critiqued. Organizational compliance can be achieved through effective corporate governance; to be in noncompliance could hold negative results that could lead to litigation or possible lawsuits.Compliance vs. Noncompliance of RecommendationsSarbanes-Oxley Act, make CEO's and CFO's responsible to certify the financial reports of their individual companies. New criminal penalties are

Sarbanes Oxley Act Essay

2917 words - 12 pages embrace the SOX Act and realize that it is here for the long run, the change would inevitably need to take place in the mindset of the CEO's and CFO's as opposed to Act itself. The SOX Act has various degrees of benefits to wide range of people. Though, there are some changes that could perfect the law as it stands, SOX is a necessary part of financial reporting. Over the course of the time that SOX has been mandated, there has been an increase on